Vedanta’s Demerger Plan: Anil Agarwal Sees $100 Billion Potential In New Companies

Vedanta Ltd.'s Chairman Anil Agarwal projected on Monday that each of the company's four demerged entities has the potential to grow into a $100 billion business. In a letter to stakeholders, he said the restructuring would create independent companies with strong capital structures, sector focus, and growth opportunities.

Vedanta is in the process of splitting into separate entities for aluminium, oil and gas, power, and base metals. The company aims to enhance operational efficiency and unlock shareholder value through this demerger. Agarwal compared Vedanta to a banyan tree, stating that businesses under it would grow faster as independent entities.

“I envision that each of the four newly demerged companies has the potential to grow into a $100 billion company. If you look at where we are headed as a global economy and the demand for such products, these companies and their products are the need of the hour,” Agarwal said in a letter to investors on Monday.

He reiterated that shareholders will receive one share in each new company without changes to the overall shareholding structure. He also pointed out that the existing Vedanta Limited will remain a key player, holding significant stakes in Hindustan Zinc and Zinc International, along with its technology businesses.

“The tremendous potential value unlock that the demerger will bring has also been captured well by many top brokerages and leading analysts,” Agarwal said.

Agarwal said the demerger would support India's growing demand for critical minerals and transition metals. He noted that India is on track to become the world's third-largest economy by 2027, with aluminium, copper, and zinc consumption growing at double-digit rates. He also cited examples of resource-rich economies like Australia, Chile, and Guyana, which have capitalised on their natural resources to drive economic growth.

The company recently secured shareholders and creditors approval for the demerger. Agarwal said Vedanta had delivered 4.7 times return on investment in the past five years and an 81% dividend yield. He added that with government support, the restructuring would boost global competitiveness and reduce India's import dependence.